Education Loans For Studying Abroad
After China and South Korea, India stands third on the list of students opting for study abroad. About 150,000 students leave India on a yearly basis for undergraduate, postgraduate and PhD programs. India’s most sought-after destinations for studying abroad, apart from USA, are Germany, Canada, U.K. and Australia. France, Singapore, Dubai, New Zealand are also witnessing notable increase in students from India.
Tens of thousands of Indian students go abroad for studies each year. Majority of these students go for graduate studies in STEM majors. However, there is increasing trend in students going to college studies abroad for undergraduate and M.B.A degrees, plus many students now opting for fields such as Liberal Arts, business, Media etc. We believe this trend will continue growing given the rising upper middle class in India, focus on good education and global aspirations.
The cost involved
Cost of study in U.S. colleges can vary from $25,000-$70,000 based on type of university (private or public), location of the university and the degree you are pursuing. Many universities provide some financial assistance, especially for post grad students who engage in teaching and research. U.S.A has 4,000+ colleges; hence there is a lot of variation in overall expenses.
In U.K, the cost of study can vary between $20,000-$50,000 based on the university, degree and location. In Singapore, a student may again spend anywhere from $25,000 to $50,000 based on the university, program they pursue. Some of the degree programs can be more expensive than others.
Education Loans to deal with financial worries
The study-abroad market is slated to grow by 12 per cent year on year. But growth also requires more learned; educated and smarter people to come and help out the generation next. Taking care of the financial worries for students aspiring to study abroad are the Indian banks by providing tailor-make education loans which come with attractive offers.
The expenditure for studying in the foreign countries differs, depending on the University, course, duration, and also on the cost of living of that particular country. Indian banks have chalked out solutions to simplify the financial complexities of higher education and have adapted loan solutions for respective counties thus helping academically brilliant students pursue their dream courses in the universities of their choice.
Banks offer loans with altering rate of interest. It is sensible to compare the loans as offered by different banks and go for a systematic comparison. It is a general generally seen that public banks offer lower interest rates than private ones. Though presently interest rates vary between 11% and 14%, most of the loans are given on a floating rate basis, and can increase or decrease later.
Here are few other things to keep in mind before you apply for education loans-
1. Borrowers have to pay margin money for loans exceeding Rs 4 lakhs which is generally 15% of the total loan amount.
2. For education loans of Rs 7.5 lakhs, an LIC policy or some other documents of immovable property in your name, have to be kept as collateral.
3. The final amount received as loan could be little lower than the one applied for as exchange rate at the time of disbursement could vary.
4. There will be a holiday period which lasts up to the duration of the course or till the borrower finds employment. It also depends from bank to bank. Once this period ends, borrowers will have to start paying EMIs.
5. Another critical part of the loan-process is completing the KYC (Know Your Customer) as it helps the bank feel secure about the ability of the borrower in repaying the amount and also about the authenticity of documents provided.
1. Applicants must Indian citizens and aged between 18 and 35 years; co-applicants must be Indian citizens
2. Co-borrower/s, mostly parents, must have bank accounts in India
3. Applicants must produce confirmation of admission in the colleges before disbursement of loans
4. Borrower and Co‐applicant(s) must meet the banks’ credit and other norms as applicable
5. It is compulsory to have earning co‐applicant(s) based in India to support the loan application
6. Co‐applicant(s), whose profiles include- Father / Mother / Brother / Sister (married) /Spouse, have to produce proofs to establish their relationship with the student, to the satisfaction of the banks.
7. The Co‐applicant’s earnings will be the determining factor for the loan eligibility
Terms and conditions
Education loans are given under the slot of ‘Study-Abroad’ and include many countries. One can apply even before deciding the country you will be going to for higher education. The final loan will be designed and personalised according to the need of the Country confirmed by you.
The loans are disbursed in India in INR as and when required by students and the repayments are also to be made in Indian Rupees only. Terms of education loans take into consideration factors like duration of study, grace period after the Study and repayment period. The loan term is also dependent on aspects like repayment ability of the applicant/s, age of the co‐applicant and future prospects of the course studies.
Banks often pay the tuition fee directly to the college/university or through an authorized service provider. The tuition fees are given in installment depending on the requirement of the particular institute. The sum related to other charges is also provided in installments duration of the period of study.
Collaterals accepted by most banks include residential flat/ house, non‐agricultural land, and fixed deposit, assigned in favour of the bank to which load is applied for.
Costs covered in the loan include the tuition fees, and other expenses like hostel and travelling charges, exam, library and laboratory fees, buying books/ uniforms/ equipment/instruments; and purchase of computers, laptops if considered essential for the course as decided by banks. Air fare for one economy class return ticket between India and the country of study is also included by some banks.
Students can apply for education loans for management / engineering courses / medicine courses, or for graduate and post graduate degrees in arts, science, architecture, hotel management, etc. Applicants have to get a margin of 5% to 15% for loans taken for studying abroad. For the marginalized and economically backward segments of the society, The Government of India has now introduced an interest rate subsidy scheme for repayments done during the moratorium period.
Author: Baishali Mukherjee
Profile- An independent writer and journalist for last nine years; presently working with Education World, Entrepreneur India, Scrabbl.com and Stoodnt.com. Worked as the content head for four books and have articles and features published in leading print and digital media spaces.
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